FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 0-26480
PEOPLES STATE BANK
PROFIT SHARING 401(K) PLAN
(Full title of the plan and the address of the plan, if different from the
issuer named below)
PSB HOLDINGS, INC.
1905 WEST STEWART AVENUE
WAUSAU, WI 54401
(Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office)
PEOPLES STATE BANK
PROFIT SHARING 401(K) PLAN
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-11
SUPPLEMENTAL SCHEDULES:
Schedule 1 - Item 4i - Schedule of Assets (Held at End of Year) 12
2003 Form 5500 Line 4a - Schedule of Delinquent Participant Contributions 13
Schedules not filed herewith are omitted because of the
absence of conditions under which they are required.
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WIPFLI
Independent Auditor's Report
Board of Trustees
Peoples State Bank
Wausau, Wisconsin
We have audited the accompanying statements of net assets available for
benefits of Peoples State Bank Profit Sharing 401(k) Plan as of December 31,
2003 and 2002, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2003. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2003 and 2002, and the changes in its net assets available for
benefits for the year ended December 31, 2003, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets
(held at end of year) and the supplemental schedule of delinquent participant
contributions are presented for the purpose of additional analysis and are not
a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
WIPFLI LLP
Wipfli LLP
June 8, 2004
Wausau, Wisconsin
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PEOPLES STATE BANK
PROFIT SHARING 401(K) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2003 and 2002
2003 2002
Assets
Receivables:
Employer contributions $ 238,000 $ 203,055
Participant contributions 0 7,570
Investments 3,874,639 2,723,069
Net assets available for benefits $4,112,639 $ 2,933,694
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PEOPLES STATE BANK
PROFIT SHARING 401(K) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 2003
Additions:
Employer contributions $ 324,321
Participant deferral contributions 259,531
Participant rollover contributions 14,725
Interest income - Participant loans 6,006
Investment income 641,484
Total additions 1,246,067
Deductions:
Participant benefits and withdrawals 66,743
Loan processing and maintenance fees 300
Commissions on purchases of PSB Holdings, Inc. common stock 79
Total deductions 67,122
Net additions 1,178,945
Net assets available for benefits at beginning 2,933,694
Net assets available for benefits at end $ 4,112,639
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PEOPLES STATE BANK
PROFIT SHARING 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002
NOTE 1 DESCRIPTION OF PLAN AND FUNDING POLICIES
The following description of the Peoples State Bank Profit Sharing
401(k) Plan (the "Plan") provides only general information.
Participants should refer to the Plan Agreement for a more complete
description of the Plan's provisions.
GENERAL
The Plan was established on October 1, 1989. It is a defined
contribution plan covering all full-time employees of Peoples State
Bank (the "Bank"). An employee becomes eligible to participate in the
Plan on the first entry date (the first day of the quarter) following
the completion of 1,000 hours of service or one year of service,
provided they have reached the age of 21. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
CONTRIBUTIONS
Participants are allowed to contribute 50% of pretax annual
compensation, up to the annual maximum allowed by the Internal Revenue
Service (IRS). The Plan allows participants to roll over
distributions from other retirement plans. The Bank currently matches
50% of the first 6% of compensation a participant contributes to the
Plan. Additionally, the Bank may make a discretionary profit sharing
contribution as determined by its Board of Directors. Contributions
are subject to certain limitations.
All investments in the participants' accounts are participant
directed. The Plan currently offers nine mutual funds, PSB Holdings,
Inc. common stock, and a stable value fund as investment options for
participants.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution, the Bank's matching contribution and allocations of (a)
the Bank's discretionary profit sharing contribution and (b) plan
earnings/losses. Discretionary profit sharing allocations are based
upon each participant's eligible pay in proportion to the pay of all
eligible participants. Allocations of plan earnings are based on
investment options and account balances. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
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VESTING
Participants are fully vested in their salary deferral and rollover
contributions plus actual earning/losses thereon. Vesting in the
Bank's matching and discretionary contributions plus actual
earnings/losses thereon is based on years of continuous service. A
participant is fully vested in the Bank's contributions after six
years of continuous full-time service.
PARTICIPANT LOANS
Participants may borrow from their fund accounts up to a maximum of
one-half the participant's total vested balance, not to exceed
$50,000. Loan transactions are treated as transfers between the
participant's investment fund and the Participant Loan Fund. Loan
terms range from one to five years. The loans are secured by the
balance in the participant's account. Loans originated under the
current plan bear interest at a rate equal to the prime rate at the
time the loan is taken out plus 1%. Interest rates on existing loans
range from 4.75% to 9.0%. Principal and interest are paid ratably
through bi-weekly payroll deductions or through bi-weekly cash
payments by Plan participants who are no longer employees of the Bank.
PAYMENT OF BENEFITS
On termination of service due to death, disability, retirement, or
termination of employment, a participant may elect to receive either a
lump-sum amount equal to the value of the participant's vested
interest in his or her account or annual installments over a period of
time if the vested account balance exceeds $5,000. If the
participant's vested account balance does not exceed $5,000, the Plan
will distribute that portion, in lump-sum, on the first distribution
date after the participant terminates employment with the Bank, or as
soon as administratively practical following that date.
FORFEITURES
Plan forfeitures arise as a result of participants who terminate
service with the Bank before becoming 100% vested in the Bank's
contribution. These forfeitures are applied first to payment of plan
administrative expenses. Any remaining forfeited amounts will be
allocated to qualifying participants as if they were additional
employer profit sharing contributions.
EXPENSES OF THE PLAN
The Bank absorbs various plan expenses, including third-party
administration and audit fees.
PLAN TERMINATION
The Bank intends to continue the Plan indefinitely, but reserves the
right to terminate the Plan at any time. In the event of termination,
the account of each participant will be 100% vested and
nonforfeitable. The account will be held under the Plan and continue
to
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accrue investment earnings until it is used to provide benefits
according to the terms of the Plan.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are presented on the accrual
basis of accounting in accordance with generally accepted accounting
principles.
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires the plan administrator to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results may differ from those
estimates.
INVESTMENT VALUATION
Investments are stated at fair value. The Plan's various mutual fund
investments are carried at current value, which represents the quoted
market values of the underlying investments. The fair value of common
stocks and other investments are based on published market prices on
the last business day of the plan year. Loans are valued at cost,
which approximates fair value, and are deemed collectible. Securities
transactions are accounted for on the trade-date basis (the date the
order to buy or sell is executed).
Gains or losses on security transactions are recorded as the
difference between proceeds received and the carrying value of the
investments. Interest income is recognized on the accrual method, and
dividend income is recorded on the ex-dividend date.
Investment income on the statement of changes in net assets available
for benefits includes unrealized appreciation or depreciation,
realized gains and losses, interest, and dividends. Specific detail
of investment income is not available from the trustee.
PAYMENT OF BENEFITS
Benefit payments to participants are recorded upon distribution.
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NOTE 3 INVESTMENTS
The following represents a summary of the market value of investments
at December 31, 2003 and 2002. Investments that individually
represent 5% or more of the Plan's net assets available for benefits
are separately identified.
ASSET MARKET VALUE
2003 2002
INVESTMENTS AT FAIR VALUE AS
DETERMINED BY QUOTED MARKET PRICE
Common stock - PSB Holdings, Inc. $ 23,157 $ 0
Registered investment companies:
Janus Adviser Worldwide 388,879 0
Delaware Diversified Income Fund 272,274 0
Delaware Small Cap Value Fund 988,729 0
Delaware S&P 500 Index Fund 1,258,185 0
Morley Stable Value - Omnibus Fund 0 420,156
Neuberger Genesis Fund 0 729,431
Strong Government Securities Fund 0 254,567
Vanguard 500 Index Fund 0 921,873
Vanguard International Growth Fund 0 256,908
Other 412,855 0
INVESTMENTS AT ESTIMATED FAIR VALUE
Security Trust Company - Cash 0 18,040
Participant loans 94,110 122,094
INVESTMENTS AT CONTRACT VALUE
Common collective trust with Delaware Management
Trust Company - Stable Value Trust 436,450 0
Total investments $ 3,874,639 $ 2,723,069
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During 2003, the Plan's investments (including investments bought,
sold, and held during the year) appreciated (depreciated) in value as
follows:
NET
CHANGE
INVESTMENTS AT FAIR VALUE AS IN FAIR
DETERMINED BY QUOTED MARKET PRICE VALUE
Common stock - PSB Holdings, Inc. $ (1,500)
Registered investment companies 640,652
INVESTMENTS AT CONTRACT VALUE
Investment contract with Delaware Management
Trust Company - Stable Value Trust 2,332
Net change in fair value $ 641,484
NOTE 4 RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits
at December 31, 2003 to Form 5500. Reconciling differences exist
since the financial statements are prepared on the accrual basis of
accounting and the Form 5500 is prepared on a modified cash basis.
2003 2002
Net assets available for benefits $ 4,112,639 $ 2,933,694
Less - Receivables for employer and participant
contributions 238,000 210,625
Less - Cash received by the Plan during 2002 and
not allocated to participants until 2003 18,040
Net assets available for benefits - Form 5500 $ 3,874,639 $ 2,705,029
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Following is a reconciliation of contributions received per the
financial statements at December 31, 2003, to Form 5500:
EMPLOYER PARTICIPANT
Contributions per the financial statements $ 324,321 $ 259,531
(accrual basis)
Less - Contributions receivable at December 31, 2003 238,000 0
Plus - Contributions receivable at December 31, 2002 203,055 7,570
Plus - Contributions received by the Plan during the
2002 Plan year - not allocated to participants
until the 2003 Plan year 4,682 13,358
Contributions per Form 5500 $ 294,058 $ 280,459
NOTE 5 TRANSACTIONS WITH PARTIES-IN-INTEREST
PSB Holdings, Inc. is the parent company of Peoples State Bank, which
serves as the sponsor of the Plan. The Plan had the following
transactions with PSB Holdings, Inc.
2003
Purchases of stock:
Number of shares 656
Value of shares on transaction dates $ 24,657
Average share price purchased $ 37.59
Sales of stock:
Number of shares 0
Value of shares on transaction dates N/A
At December 31, 2003, the Plan held 656 shares of PSB Holdings, Inc.
common stock.
Plan investments are managed by Delaware Investments. Delaware
Management Trust Company, a company related to Delaware Investments,
is the custodian and trustee as defined by the Plan and, therefore,
these transactions qualify as party-in-interest.
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NOTE 6 PARTY-IN-INTEREST NONEXEMPT TRANSACTIONS
During the Plan years ended December 31, 2003 and 2002, the Bank
engaged in nonexempt prohibited transactions by not timely remitting
employee deferral contributions to the Plan's trust as required by the
Department of Labor's plan asset regulations for the majority of
payroll periods subsequent to June 15, 2002.
Prior to June 15, 2002, the transmittal of employee deferral
contributions to the trust funding the Plan was the responsibility of
the Bank's controller, and deferrals were deposited timely in
accordance with the Department of Labor's plan asset regulations. On
or around June 15, 2002, responsibility for the transmittal of
deferrals was transferred to a new department. Due to inadequate
training of employees in this new department on the time period for
remitting deferrals, deferrals were not remitted to the trust timely
for a majority of the payroll periods subsequent to June 15, 2002. As
a result, employee deferral contributions were generally remitted to
the Plan approximately 15 days after the date the funds were withheld
from employee's paychecks.
The Department of Labor has established a Voluntary Fiduciary
Correction Program (VFCP), which allows plan sponsors to correct
nonexempt prohibited transactions such as the failure to timely remit
employee deferral contributions and obtain full relief from any civil
investigation by the Department of Labor and civil penalties. Under
this program, the Bank is required to correct the breach fully and
make the Plan whole.
The Bank is working with employee benefits counsel to file an
application under the VFCP, correct the violations, and make the Plan
whole. The Bank anticipates its application under VFCP will result in
the issuance of a "no action letter" by the Department of Labor.
The prohibited transactions have been reported on the supporting
schedules as nonexempt prohibited transactions with a party-in-
interest in accordance with the Department of Labor Rules and
Regulations for Reporting and Disclosure under ERISA.
NOTE 7 INVESTMENT CONTRACTS
The Plan maintains an investment contract fund with Delaware
Management Trust Company, referred to as the Stable Value Trust. This
fund holds investment contracts with various investment companies.
Contributions are maintained in a common/collective trust account.
The account is credited with earnings on the underlying investments
and charged for plan withdrawals and administrative expenses charged
by Delaware Management Trust Company. The contract is included in the
financial statements at contract value, which approximates fair value,
as reported to the Plan by Delaware Management Trust Company.
Contract value represents contributions made under the contract, plus
earnings, less plan withdrawals and administrative expenses.
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NOTE 8 TAX-EXEMPT STATUS OF THE PLAN
The Bank adopted a Prototype Nonstandard 401(k) Profit-Sharing Plan
with CODA (cash or deferred arrangement) and utilizes the services of
its third-party administrator, Retirement Financial Services, Inc.
Retirement Financial Services, Inc. has received an IRS notification
letter dated August 7, 2001, which indicates that an employer who
adopts this plan may rely on the notification letter with respect to
the qualification of its plan under the appropriate sections of the
Internal Revenue Code. Companies that adopt a prototype plan approved
by the IRS are no longer required to obtain a determination letter.
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PEOPLES STATE BANK PROFIT SHARING 401(K) PLAN
PLAN'S EIN #39-1305529 PLAN #002
SCHEDULE 1 - ITEM 4I - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
(A) (B) (C) (D) (E)
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF INVESTMENT INCLUDING MATURITY DATE, CURRENT
LESSOR, OR SIMILAR PARTY RATE OF INTEREST, COLLATERAL, PAR, OR MATURITY VALUE COST VALUE
* Delaware Investments Cash reserve ** $ 11,763
* Delaware Management Trust Company Delaware Stable Value Trust A ** 436,450
MFS MFS Massachusetts Investors Growth Stock Fund ** 57,104
Janus Janus Adviser Worldwide ** 388,879
Van Kampen Van Kampen Comstock Fund ** 60,579
* PSB Holdings, Inc. PSB Holdings, Inc. common stock ** 23,157
* Delaware Investments Delaware Trend Fund ** 53,947
* Delaware Investments Delaware Diversified Income Fund ** 272,274
* Delaware Investments Delaware Foundation Balanced Fund ** 179,464
* Delaware Investments Delaware Foundation Growth Fund ** 49,998
* Delaware Investments Delaware Small Cap Value Fund ** 988,729
* Delaware Investments Delaware S&P 500 Index Fund ** 1,258,185
Participant Loans Loans receivable - 4.75% to 9.00% 94,110
<FN>
**All investments are participant-directed, therefore cost information may be
omitted.
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PEOPLES STATE BANK PROFIT SHARING 401(K) PLAN
PLAN'S EIN #39-1305529 PLAN #002
2003 FORM 5500 LINE 4A - SCHEDULE OF DELINQUENT PARTICIPANT CONTRIBUTIONS
December 31, 2003
Participant Total that Constitute Nonexempt Prohibited Transactions Total Fully
Contributions Contributions Contributions Corrected
Transferred Contributions Corrected Pending Correction Under VFCP and
Late to Plan Not Corrected Outside VFCP in VFCP PTE 2002-51
$ 439,797 $ 0 $ 0 $ 439,797 $ 0
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plan administrator of the Peoples State Bank Profit Sharing 401(k) Plan has
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
PEOPLES STATE BANK
DATE: June 28, 2004 By: SCOTT M. CATTANACH
Scott M. Cattanach
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
TO
FORM 11-K
OF
PEOPLES STATE BANK
PROFIT SHARING 401(K) PLAN
FOR THE YEAR ENDED DECEMBER 31, 2003
Pursuant to Section 102(d) of Regulation S-T
(17 C.F.R. Section 232.102(d))
Exhibit 23.1 Consent of Wipfli, LLP
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